Page 133 - Leaders in Legal Business - PDF - Final 2018
P. 133
For new work, the modeling of a potential matter or client relationship can be based on
either:
• Hours and resources (person or class/level)
• An amount with a ratio of staffing
• Leveraging a priori matters as the starting point
• Unit pricing/procedures
Guidelines for outside counsel add another layer to the modeling process. As clients
focus on controlling costs, they may offer stipulations and conditions to firms seeking work, and
these must be considered in evaluating the profitability of such a relationship. The reality is that
most matters are still priced on an hourly basis, and the budget communicated to the client acts
as a de facto fee cap. Factor in the customary practice of giving many clients significant
discounts on their hourly rates, and it’s clear that firms have shifted the risk completely onto
themselves.
To survive in a market where previous billing and pricing models are now regarded as
gentle suggestions at best, firms must harness their own data — and the technology that helps
them to effectively reshape their pricing practices — or struggle to remain profitable in a new
economic era.
119
either:
• Hours and resources (person or class/level)
• An amount with a ratio of staffing
• Leveraging a priori matters as the starting point
• Unit pricing/procedures
Guidelines for outside counsel add another layer to the modeling process. As clients
focus on controlling costs, they may offer stipulations and conditions to firms seeking work, and
these must be considered in evaluating the profitability of such a relationship. The reality is that
most matters are still priced on an hourly basis, and the budget communicated to the client acts
as a de facto fee cap. Factor in the customary practice of giving many clients significant
discounts on their hourly rates, and it’s clear that firms have shifted the risk completely onto
themselves.
To survive in a market where previous billing and pricing models are now regarded as
gentle suggestions at best, firms must harness their own data — and the technology that helps
them to effectively reshape their pricing practices — or struggle to remain profitable in a new
economic era.
119
